Demand is the mother of invention

  • If there was ever any doubt about the Alternative Finance sector’s capacity for innovation, just take a look at the latest offerings from UK Bond Network and Wellesley & Co. While others have been waiting for new legislation to kick in, these two have managed to jump the starting gun with early strikes.

    UK Bond Network’s EvolutionSipp, launched in conjunction with SIPPclub, offers High Net Worth pension investors access to a P2P high-yield bond auction service, either through a SIPP or SSAS wrapper. UK Bond Network joins Proplend and a handful of others that can now accept SIPP and SASS money.

    The really smart bit is that if things go wrong and the SIPP operator fails, investors are covered by the Financial Services Compensation Scheme, something that does not hold true for direct investments in P2P. The rules are different for a SSAS - the company version of a SIPP - and investors are still on their own.

    Meantime, Wellesley & Co. appears to have won the race to find a way of getting P2P into an ISA through it's P2P ISA Bond. The bond money will be combined into a fund for lending across the platform and offers tax free annual returns of either 4 per cent or 5.25 per cent, depending on term.

    We can leave it to others to argue over the respective merits of these two schemes, but what is crystal clear is that the backroom technicians have been working overtime to come up with two very clever solutions for two very distinct market segments. Examples, if you like, of how quickly the Alternative Finance industry can move into space wherever there is demand, and how an entirely new breed of original thinkers is capable of overcoming obstacles that not so long ago the traditionalists would have had us believe were insurmountable.

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